A Simple Guide to Area Median Income
If you’ve looked into Habitat for Humanity, affordable housing programs, or even some rental assistance programs, you’ve probably come across the term “Area Median Income,” often shortened to AMI. It can sound like complicated government jargon, but the idea is actually pretty simple. AMI is a tool used to help measure what people in a community earn and determine who may qualify for certain housing programs. In this article, we’ll break down what AMI is, who calculates it, how Habitat uses it, and why it plays such an important role in creating affordable housing opportunities.
Area Median Income (AMI) is the midpoint of all household incomes in a specific area. If every household’s income were lined up from lowest to highest, the AMI would be the income right in the middle. Half of households earn more than the AMI, and half earn less.
AMI is often used by housing organizations, lenders, and government programs to determine eligibility for housing assistance and affordable homeownership opportunities. Rather than looking at a single income number, many programs use percentages of AMI. For example, a housing program (like Habitat for Humanity) may serve households earning between 30% and 80% of the area’s AMI.
Area Median Income is calculated each year by the U.S. Department of Housing and Urban Development (HUD). Using income data from communities across the country, HUD determines median income levels for different geographic areas and household sizes.
Because incomes can vary widely from one place to another, AMI is not a single national number. Depending on the program, AMI may be calculated at the national, state, county, or even city level. This helps ensure that housing programs reflect the economic realities of the communities they serve.
At Bennington County Habitat for Humanity, we use the AMI figures established for Bennington County. This allows us to evaluate applicants using income guidelines that are based on our local community rather than a statewide or national average.
HUD updates these figures annually, which means income limits can change from year to year as economic conditions change.
If AMI were just a single number, housing programs would be much easier to understand. In reality, income limits are adjusted based on household size, which means the limits for a household of one can look very different from those for a household of four.
This is why housing programs often refer to households earning a certain percentage of AMI rather than a specific dollar amount. While the percentages stay consistent, the actual income limits can vary depending on where you live and how many people are in your household.
Fortunately, HUD publishes these income limits each year. This allows housing organizations, lenders, and community programs to work from the same set of up-to-date data rather than creating their own income guidelines. In other words, organizations like Habitat are not making these numbers up as they go. We are using a nationally recognized standard that is updated regularly to reflect changing economic conditions.
At Bennington County Habitat for Humanity, AMI is one of several tools we use when evaluating applications for our homeownership program. By using established income guidelines, we can ensure that our homes are being made available to households who need affordable homeownership opportunities while still being able to sustain the responsibilities of owning a home.
Using AMI also helps create a fair and consistent application process. Rather than making subjective decisions about who may or may not qualify, we rely on the same publicly available standards used by housing organizations across the country.
Most importantly, AMI helps Habitat fulfill our mission. It allows us to focus our resources where they can have the greatest impact, helping local families build strength, stability, and self-reliance through affordable homeownership.
